The announcement by Prime Minister Malcolm Turnbull culminates years ofplanning to replace Australia’s ageing diesel and electric-powered CollinsClass submarines, which are due to leave service from around 2026.

Turnbull said the 12 new subs "will be the most sophisticated naval vesselsbeing built in the world."

"The recommendation of our competitive evaluation process... wasunequivocal, that the French offer represented the capabilities best able tomeet Australia’s unique needs," he added in Adelaide, where the submarines willbe constructed.

"This is a momentous national endeavour. This is securing together with ourcommitment to surface vessel construction, this is securing the future ofAustralia’s navy, over decades to come."Turnbull said he had spoken to French President Francois Hollande to informhim of the decision.

A Japanese government-backed consortium led by Mitsubishi Heavy Industries,and German group ThyssenKrupp Marine Systems were also in the running.

Besides matching the range and endurance of the Collins Class, the newgeneration of subs needed to offer superior sensor performance and stealthcapabilities.

DCNS has said it planned to build a 4,500-tonne conventionally-poweredversion of its 4,700 tonne Barracuda, to be named Shortfin Barracuda.

It believed its design was the most advanced, with a pump-jet propulsionsystem it said was much quieter than a propeller, making the submarine harderto detect.

The tender process has been politically sensitive, with Canberra keen tomaximise Australian industry involvement and jobs. There were fears that anyoff-the-shelf purchase could kill off the domestic shipbuilding industry.

"This a great day for our navy, a great day for Australia’s 21st centuryeconomy, a great day for the jobs of the future," said Turnbull.

"Australian built, Australian jobs, Australian steel, here right where westand."– AFP